People can watch baseball on TV and yet many still go to games. In person attendance is simply a different experience altogether. Until technology advances to a point where there is no difference between Online and In-person experiences such as conventions, sporting events, amusement parks, etc. The In-Person cons will continue.
Additionally, the most dedicated fans attend in-person events. Exhibitors at Gen Con know that they will be able to reach a concentrated group of serious gamers, people who could easily become regular/long-term customers. They also know that they will be reaching a lot of bloggers/podcasters who can spread buzz about their products in the right places.
I'm sure companies would much rather sell via an online event versus in-person...if the exposure and sales were the same as they got in-person. Hosting an online event is much cheaper than packing up and traveling to GenCon for 5-6 days, but it's just not the same.
While I'm sure some vendors may attend not expecting a huge [monetary] profit, if it wasn't a good investment to spend the time and money to show up at a typical in-person con, we would have switched to online-only events long ago. Apparently Paizo and others did not feel the 50-60% attendance cap and lessened convention space was worth the trouble this year.
All that to say I am confident the show will go on.
I barely knew that there was an exhibit hall last year. It was so easy to ignore, and had none of the spectacle that you normally expect on a show floor. Online cons don't seem to sell a lot of merchandise.
Holy frak, was I scared when I saw this thread got necro'd (until I read the new posts).